All network gear is run by software and if you have access to the source code for the software then you have the ability to identify vulnerabilities which could be exploited. I think it unlikely that the Chinese telecoms would so stupid as to include a Trojan Horse or other bit of malware into their code because this would be too easy to identify. However, designing in a vulnerability or having access to the source code would enable them to accomplish the same thing as incorporating malware in quick order if they should decide to do so.

Given that Chinese telecoms are so tightly involved with the Chinese government and Chinese military and given that Western military effectiveness relies so heavily on command and control systems which use networks heavily, I think that it would be foolish for the west to use Chinese telecom equipment.

The Huawei incident shows Chinese hypocracy and double standards very clearly. Any industry that is blocked from investments or business in China should force their governments to block Chinese investments of those industries in their home country. China blocks foreign telecoms. So, Chinese telecoms should be blocked. When you add the security concerns on top of that, the Chinese have no argument other than the hypocritical one.

If China opened up their market for Europe and U.S there will not be any security complaints against them. China will not do that because they value their macroeconomic policies than helping collapsed western countries.

So you are ok with being a hypocrite and sticking up for Chinese hypocrites. Thanks for telling us that.

Chinese cite security concerns for everything BTW. Remember the Australian citizen who was arrested for stealing state secrets, which were actually common economic knowledge. He worked for Rio Tinto, if that rings a bell.

Coffee man, your ignorance is appalling, are your bigotry and racism. If you don't know anything, why don't you first read and learn, instead of propagating nonsense? People like you should be blocked from posting, at least until you can pass an IQ test.

First, China does not "block" foreign telecom companies. In fact, Cisco, Nortel and others, have made many major installations in China - including those related to 'national security'.

The claims you make are not only incorrect, but are fabricated falsehoods. And Huawei is no more a "threat" to US national security than Cisco is to China's national security.

Next, the "Australian citizen" was not arrested for "stealing state secrets". He was arrested for giving and receiving bribes, for illegally obtaining proprietary information on the plans of China's iron ore companies so that the Australian mining firms could know how high to goose the prices. He broke a multitude of China's corporate laws, and is in prison where he belongs - as he would be in any country.

The 'state secrets' you refer to, were a separate issue dealing with China's oil production, and they were definitely secrets. An individual paid a lot of money to obtain that information, then tried to sell it on the open market to US oil companies. He tried later to claim that information was in the public domain, but it wasn't, and it isn't in any country. If you knew anything about the oil business, you would understand that. He also is in prison where he belongs.

The only hypocrite on this forum appears to be you - pretending to an angelic halo while promulgating trash against China - from an obvious mean-spiritedness and ignorance.

It is YOU who needs to learn something about China. And about good manners, and keeping your mouth shut when you don't know what you're talking about.

Chinese people always say "your are racist" "you don't understand China" or "you are a china-basher" if they don't agree with what I say. But, they say "you are chinese" "you are a Chinese scholar" or "you are the smartest person in the word" if I agree with them.

You should take this chance to learn more about your own country and the bad things your government does instead of getting emotional about facts that everyone has already accepted.

Your arrogant post doesn't bother to address the false claims you made. Instead, you ignore the evidence of your foolish so-called "facts", and continue with your white supremacy, claiming it is other who know nothing about China while you are only one, presumably enlightened by god, and only you know "the real truth".

Perhaps he read your previous posts concerning how you believe that the American system of private schools is "racist toward white people" by allowing affirmative action benefits to blacks and hispanics?

USA must have fallen very very low that it has to resort to such base protectionist measures in order to contain China. However, these base measures will not help USA to gain anything, instead they will precipitate its decline. It would be better for the US to cooperate with China instead of trying to contain China. Unfortunately, the American congressmen lack the necessary breadth of vision to save their country. Maybe they are merely interested in filling their pockets. What a pity!

So how do you explain Chinese protectionism, specifically the protection of telecom businesses in China from foreign competition? Jean Michel, you are a typical hypocritical Chinese person, and we are sick and tired of hearing the hypocracy coming from the Middle Kingdom.

It would be better for the US to cooperate with China, but that requires the Chinese to stop their protectionism, nationalism, racism, and aggression against US companies first. I hope some day you learn something about business, politics, and relations in China.

In my opinion, China's investments in the U.S. should be approved. they should have more companies like shells, for example, to let them off the Chinese investors. The cash will obviously be a scam and it should be distributed to the US investors who have lost billions on the Chinese investments/plans.

Show me evidence. China is broke. They only invest in US treasuries and Euro bonds to keep their currency low, seriously do you even bother to read the articles in this magazine? China depends more on Europe to buy its goods and now that Europe has stopped buying, China is stockpiling goods it can't get rid of. The Chinese economy is hemorrhaging money. They need to keep the money losing factories running to keep the workers off the streets, that is a lot of money just disappearing into thin air. China is producing and no one is buying, how long do you think that will last?

Europeans are in desperate need of funds, but remain worried about losing their independence and security. On the other hand, China is still developing. Growth may be slow now a days, but it will regain its momentum with out much delay.Truth is that China do not want to dominate Europe by buying up its debt. What they want is a peaceful rising.They don't want to be a key player in Europe.

So Europe isn't dependent on China is it? But Europe should be grateful that China has not bought its debt otherwise China would dominate it. China buys debt for only one reason, and that is to supress its currency, the only thing China dominates is its own people. China owns just over one trillion of the total,of 16 trillion debt which the US has, do you think that means China dominates the US? Not even close.

Fool! At least China has the products. Europe and the US have neither the products nor the money to buy them. The Europeans and the Americans must therefore suffer much more than the Chinese.
The Chinese are expanding their sales to the ASEAN countries, the African countries, the South American countries, Russia, India and the Central Asian countries. But what about the Europeans and the Americans? They must go without the products because they cannot buy them. And they cannot produce them, too. What a pity!

I have lived and worked in China, there is nothing to be jealous of, where do you come up with this BS. China needs the west more to export to than the west needs China's imports, also if you want bring up treasury bonds the US government owns more than China by far.

Certainly the western countries are jealous of the success of China. While the western countries were invading, bombing, killing and murdering and torturing millions of people in Afghanistan, Iraq and Libya, China was fast prospering. Now, the Americans are doing everything to brake the development of China by using protectionist policies. Thankfully, the other countries are developing very fast and trade among them is growing much more rapidly than with Europe and the US. Europe and the US will soon be marginal countries.

The writer states, "A New congressional report about Huawei and ZTE, two of China's largest telecoms firms, appears to have been written for vegetarians. At least, there is not much meat in it. The study...declares the firms a threat to America's national security. Yet it presents little hard evidence to support its recommendations."

Meanwhile, in another part of the Economist, the publication writes about the problems associated with the soon-to-be Chinese president, Xi Jinping, going missing for several days with only weak explanations being given by the Chinese government as to his whereabouts.

Finally, we see the spectacle of US Congress, driven to lunacy by the Tea Party, calling up on national television US State Department officials to "spill the beans" on what really went on in Libya when the US ambassador and several staff were killed (presumably so they can embarrass the current administration), only to cut it short when they realize they are in fact broadcasting information about highly secret CIA operations in the country by doing so.

Put those three things together and it tells me the US Congress made the right move on deciding against opening the US telecom market in the US to Huawei and ZTE. Most enterprises in China that are large and profitable have in one way or another officials who are either party members, local government officials or investors who are party members or local government officials. More often than not, they hold considerable power within the companies. Of course they will deny that, but then again, if you ask for some sensitive company information that most non-Chinese firms regularly and are often required to give, Chinese companies, backed by government rules, will claim such information touches upon "state secrets". Not exactly an answer that bodes well for the concept of transparency.

Then, when officials even at the top suddenly disappear for days, with no firm reason being given despite the entire world wondering what is going on, that indicates the idea of transparency and corporate governance are not two ideas that are firmly implanted in China's state-run corporate community. Can you imagine what would happen if the US government says, "Okay, do whatever you like in the US in terms of going after business in the highly sensitive telecommunications market in the US," only to find out that suddenly the chairman of Huawei or ZTE goes missing and he is replaced with a former PLA military officer who refuses to divulge his background on the grounds of "protecting state secrets"? My guess is, the US government would look like a fool, on top of their already being called fools by those in the US business community.

My guess is the US Congressional report was vague because being specific (at least publicly to reporters) would further jeopardize what is an industry which is already prone to defense-related espionage and may indeed touch upon US national defense secrets.

It should also be noted (and this article apparently decided not to include it) that this was not some politician power-grab; there were many US companies which voiced their concerns over security, with some having been the targets of cyber attacks by Chinese hackers.

Strange, and I thought such a prudent measure given the fairly well-documented information about the amount of Chinese hacking that goes on towards foreign businesses operating inside and outside of China, would be viewed as a sound "conservative" principle by a prominent publication such as the Economist.

Oh really. The US is the only country that doesn't hold double standards. After all, US telecoms can't enter the Chinese market. That means the US is holding the Chinese to the same standards the Chinese have for us. I thought Indians were smart. I guess I was wrong.

No they aren't. They are restricted in many ways. Most foreign companies are restricted. I know, I have been working in business in China for nearly a decade. Do you really think Cisco and Ericsson are going to talk about the restrictions on their company fact page? Get off your computer for once.

Before you tell me to get off my computer again, I know how finance works in China because among other things, I work in finance in Asia and my firm invests in the mainland. Also personal attacks or insults on the Internet don't serve any purpose and is just a waste of time...

So foreign firms are not "blocked" as you say. They are just usually forced into JVs.

Sure, keep telling yourself that. If they weren't blocked, they would be invested in China a lot more heavily.

Besides Telecom, ports, mining, banks (for the most part) and many other sectores are off limites to most foreigners and/or foreign companies.

I don't really care what your experience is. I have almost a decade of experience doing business directly in the Chinese mainland. I don't pretend to know everything, but I do know foreign companies are in fact blocked in many traditional and non-traditional ways.

BTW, a forced JV is a blocking to some companies who do not agree to give up technology.

Point is that some companies, such as Boeing, Apple, Microsoft, McDonalds, and Carrefour are free to sell into the Chinese market mostly unrestricted. Others such as Goldman and Toyota are forced into JVs.

"BTW, a forced JV is a blocking to some companies who do not agree to give up technology."

Can you name a single large American company that doesn't have a presence in China and doesn't sell into the Chinese market? With the exception of defense firms I can't think of any off the top of my head.

Why is it that every bigot who shows up on these forums, finds it necessary to lay (false) claims to "I've been (or worked) in China for years", or (my favorite) "When I attended Qinghua University my professor told me . . .".

Go back to sleep. Your nonsense comments are all the proof anyone needs, that you have never been more than 5 Kms. from West Overshoe, Kansas.

You can lie all you want, doesn't change the fact that China is heading downhill fast, bad loans and Ponzi schemes are going to lead to a lot of starving pissed off people. You are a blind, ignorant fool JM.

Just because that is what you so desperately wish does not make it true. Even the corrupted rich of China are taking their money out. How do you explain a population which is more than 4 times the US making just over half it's GDP? When the western markets stop buying, or declining, as you like to say, China directly suffers. I know JM, in your perfect world everyone and every nation will kowtow to China, sorry to burst your bubble, it's not going to happen, so get to work love your family and enjoy your life. Stop your nationalistic crap already, no one cares. The world has moved to being a more globalized sphere, and China is now pushing against it. China may have a large population, but it is still only 20% of the entire worlds population. China doesn't own the world and it definitely doesn't run it, and never will.

Perhaps you are not aware of it. The US seems richer than it is because of the huge amount of money it has borrowed from other countries in the form of long term and short term bonds and, more significantly, in the form of US dollars notes which other countries keep for international trade and foreign reserves. I hope you are not ignorant of the fact that a dollar note held by a foreigner means a dollar owed to the foreigner by the US. The US now owes more than one hundred trillion dollars to other countries. This explains why the Americans can live beyond their means, that they seem richer than they in fact are. It is just like an individual who borrows money from a bank or uses his credit card to live beyond his means and thereby seems richer than he is.
However, like the individual who has borrowed money, a time will come when the US will have to reimburse the hundred trillion dollars it has borrowed. This will happen when another currency will replace the US dollar as the currency for international trade. Hopefully, you understand what it means to reimburse borrowed money.
On the other hand, China is getting richer by producing more products than it consumes and investing the surplus in capital products such as infrastructures (railways, roads, sea port and airport facilities, houses and buildings etc), machines, equipment and human capital. This way of becoming richer is sustainable whereas to borrow money in order to live beyond one's means is not sustainable.

Funny you should ask the Russians how that worked out for them, they built the largest dam in the world a few decades ago. Then they went bankrupt. Looks like china is following in their footsteps. Hope the governments feet are sensitive to the pebbles below the surface. A command economy always leads to massive misallocation of capital, China cannot change economic fundamentals, no matter how hard it tries. 100 trillion dollars, you love making up shit don't you, I'm still laughing.

For the time being, neither Russia nor China are bankrupt. Greece, Spain, Portugal, Ireland, Italy and, very soon, France, are broke. The US, which owes more than a hundred trillion dollars to other countries, will follow soon.

This is correct. Looking at everything that has ever happened, it's always the $$$ that finally determines what will be done. The Economist will stop publishing in English and become a Chinese-only edition if the $$$ numbers are big enough. In the absence of some external shock like 9/11, everything can be bought.

Or the lobbyists who are perhaps the ex-politicians or lawyers. They have good connection with many incumbent senators. Every interest group can hire the services of the lobbyists and they will approach and "influence" the relevant senators or authorities. They are very expensive to hire. But for the giant companies like the two Chinese firms, they can afford. Yet it is worth to note the reasons for US's choice to discourage the Chinese firms from entering the US market. One possibility is that some local companies have hired some lobbyists to do the work already. Therefore, even if the Chinese firms can pay, they would have to fight an uphill battle. Anyway, its the money game afterall.

"...This Pandora's box of cyberwar has already been opened ...
... by the United States.
Amid the ferocious Iran-bashing - and "by any means necessary" justifications for covert action against that country's nuclear program - that have become endemic in the West, the true significance of the Stuxnet exploit has been overlooked by many, at least in the West.
Stuxnet was the release of an important cyber-weapon - a virus that did not simply seek sensitive information or attempt to disrupt communication, but one that was reportedly rather effective in damaging a strategic Iranian facility by an act of sabotage.
It was an act of cyberwar.... "

Any OECD countries' govt that actually need to ban a foreign country from competing for bids in sensitive areas for purely security reasons usually means that its home-grown companies are not leading in the area anymore. Maybe a report should also look into the decline(?) of the certain US telecom fields??

US is developed country with supposedly leading tech companies, it's natural for China and other emerging markets (India etc.) to be protective about its market to foster home-grown companies first.
My point is, if US (or other western) telecom companies were still cutting edge and leading in their field, then the argument for not using a Chinese company would be more than security issues. However, at the moment, it seems that all the focus are to do with security (which is still a major concern on its own).

Your first argument is pathetic. Sorry, but it is true. So because the US is developed, we are supposed to give handouts to China (and India)? Talk about double standards, typical of people who can't compete.

Your comment is full of bigotry and probably typical of Americans (whether you're one of them or not). What handouts? The aid? That's up to the US govt and whatever agenda they have. It's argriculture subsidies already pushed millions of farmers in developing world over the edge. China just does what it sees as its beneficial to its own interest. If US is not happy, they can do the same, but the large corporations prefer the current status quo as long as they make a large profit (unless they're threatened with competition)
Well, I know you'd like the US to dominate the world with all its military, technology and corporations (which govt doesn't wish that), but not all countries will give up without a fight.
This is how politics work, don't look down on poorer countries and people for doing what they do to help develop their country and bring up the living standards as fast as possible. US was once like this, but I guess knowing this won't fit into your self-righteous view.

Not for disagreeing with me, but for insulting people of the developing world when you could've made your point without the added insults (maybe you don't know what's insulting).
You showed your bigotry again by stating that arrogant behaviour is a specifically Chinese trait. How do you know I'm Chinese? Because I called you a bigot or disagree with you? I guess Gordon Brown was a Chinese as well then, since he was very famous for calling people that. If you think that calling someone a Chinese is an insult to them, way to go to classify 1.3b mainlanders and millions of others overseas regardless of their education background. You only demonstrate how low some Americans can be, but I know (and hope) that people like you're in the minority.
I'm not going to respond to your comments anymore, I've went through some of your past comments and deemed that you just don't like Chinese people (probably cos the CCP did something to you since apparently you've stayed in China for years) and arguing with you is as pointless as arguing with a Chinese nationalist with a hatred for everything Japanese.

Congress should approve of Chinese telecom investments in the U.S. They should fabricate shell companies, produce fraudulent financial statements, get them audited by the likes of KPMG, then pawn them off to the Chinese investors. Once they money is scammed out of the Chinese, the U.S. should say, "Unfortunately, we will not be able to investigate this matter....so sorry for your loss".

The scammed cash should then be distributed to all the American investors who have lost billions on what have turned out to be blatantly fraudulent Chinese corporations - investors who now have zero recourse as the Chinese authorities have refused to cooperate, allowing the criminal CEO's to live free as birds, fat on all the cash they stole.

Congress should approve of Chinese telecom investments in the U.S. They should fabricate shell companies, produce fraudulent financial statements, get them audited by the likes of KPMG, then pawn them off to the Chinese investors. Once they money is scammed out of the Chinese, the U.S. should say, "Unfortunately, we will not be able to investigate this matter....so sorry for your loss".

The scammed cash should then be distributed to all the American investors who have lost billions on what have turned out to be blatantly fraudulent Chinese corporations - investors who now have zero recourse as the Chinese authorities have refused to cooperate, allowing the criminal CEO's to live free as birds, fat on all the cash they stole.]

Unless you intend to be sarcastic, the Chinese are too late to get into this game. The Banksters in Uncle-land has already done all that you said.

I'm glad I read this article, as it has regained my respect for the Economist which was someone tarnished after the Chavez election coverage. At least you guys are consistent regarding promotion of free trade.
Now I'm not gonna get all radical and say the US is simply being unfair, creating an unfair platform towards anything which involves the word China in it. No, in fact I will admit that maybe Huawei does have such a government linked agenda etc. However I believe although security was the justification provided by the report, the reality is that the US is getting all nationalistic about major domestic projects potentially going to companies which come from your biggest economical enemy.
This stance of the the Congress is just about laughably ironic as pointed out by the Economist attempting to put dirt on companies primarily due to the nation they derive from, while promoting to the world free trade, and the insistence that governments should not unfairly support domestic companies. I hope the US government is made to be a laughing stock in front of the WTO for such actions which indirectly clearly promote domestic companies.
Furthermore, why is national security only an issue when the companies from another country? Who is to say that Apple, Cisco etc do not commit to such espionage techniques in order to gain an edge against their competitors and possibly breach into the privacy of regular civilians, management of competitors or even government officials? The US I worry is playing a very dangerous game promoted potentially by an ever diving economy compared to Asia, not to mention election year. Regardless of its reasons, if the US maintains its sly tactics of providing an advantage to its own companies, one does not feel too good of the consequences for US companies abroad.

The Chinese invented the decimal number system so far in the past that the origin is lost in the mists of time. They invented and used decimal fractions, they invented the zero and its use, all of these at least 2,500 years before the West."

I believe it was the Indians who invented all that.

Also about metallurgy, some recent report suggest that the Europeans were ahead of China a few thousand years ago. Did you watch a Horizon (?) program about some blonde corpses discovered in Xingjiang and the associated story?

Let's not form a debating society on this one. The documentation is too extensive for contrary claims. Joseph Needham spent decades researching old texts and providing proof positive of all those items.

I have seen a claim which may be valid, of India simultaneously developing a zero or some surrogate, but the decimal system is totally Chinese. That is not in dispute.

As to the metallurgy, Yes, I am sure of my facts. China was infinitely ahead of Europe in all respects until very recently. Here again, the documentation is too extensive for contrary debate.

That's not to say that people don't file false claims in an attempt to trash China's history to fulfill their own political agenda.

Bernard Brizay, a Jewish historian, claimed in his book that the Chinese themselves destroyed the Yuanmingyuan and sold all the looted pieces in auction houses in downtown Beijing.

And we've had other Jewish authors like Julia Lovell claiming that China's opium century was just a "tragic-comedy" and the Chinese themselves were responsible for it, conveniently forgetting to mention it was the Sassoon family to whom Queen Victoria granted the exclusive opium franchise for China.

We can never stop people like this from writing whatever version of history they want. But we can be smart enough to not accept this trash.

In any case, China's record of inventions and discoveries contains many thousands of items, all of which were copied by the West at some stage. To focus on one item like the zero is just an attempt to cheapen the entire list.

Bernard Brizay, a Jewish historian, claimed in his book that the Chinese themselves destroyed the Yuanmingyuan and sold all the looted pieces in auction houses in downtown Beijing.

And we've had other Jewish authors like Julia Lovell claiming that China's opium century was just a "tragic-comedy" and the Chinese themselves were responsible for it, conveniently forgetting to mention it was the Sassoon family to whom Queen Victoria granted the exclusive opium franchise for China.]

Wow, they are just like the Japanese Mike Tyson on TE forums. I am not aware of them until now.

I am not born with hatred toward the Jews but I have LEARNT to detest the Jewish propagandists.

I made no claim that metallurgy didn't exist, simply that China led the world in that area. And there wasn't a whole lot happening anywhere in 7200 B.C.

And please keep your slanderous accusations to yourself. I am not anti-anybody. What I am against is some peole rewriting history to suit their political/ideological objectives, and trying to mislead the world.

And that includes you, with your foolish link about Turkey. "Evidence of metallurgy" is hardly documentation of expertise in metals.

If you don't know anything, don't make claims. Your attempt to denigrate China's accomplishments makes you "fiercely anti-Chinese". How are you better than those you accuse?

Companies in the cutthroat field of telecommunications received a remarkable marketing document recently, one aimed at causing suspicion about one of their biggest competitors, the Chinese firm Huawei.

“Fear of Huawei spreads globally,” the report reads. “Despite denials, Huawei has struggled to de-link itself from China’s People’s Liberation Army and the Chinese government.”

The paper’s author was Huawei’s main U.S. rival, the California-based company Cisco Systems.

Analysts say the efforts to discredit Huawei illustrate a wariness among U.S. firms of highly successful, low-priced competitors from China that are roiling telecommunications - once a distinctly American industry.

It was long thought that we were the number-one economy and China just supplied cheap labor,” Guthrie said. “Now it is clear that China has a lot to offer in terms of innovation and industrial policy and state investment, and now people are scared.”

US Ambassador Gary Locke is not a friend of China.

In November 2010, when Locke was Commerce Secretary, he put pressure on Sprint Nextel to reject any bids from Huawei, for purely political reasons.

Where did Huawei and ZTE get their technology to grow their product lines so quickly? Did it have any thing to do with China forcing companies to move their R&D to China if they want the product manufactured in China? The fact is these companies stole the technology. Huawei was manufacturing Cisco and other products and all of a sudden, Huawei is producing the same product and configurations. So, why give an advantage to Theives?

Huawei's technology is all home-grown. In any place where they use foreign IP, they pay license fees like everybody else.

Where did you get the foolish idea that China copied everything from the West? You need to grow up.

Read the link I posted above, about China's record of inventions. Fully two-thirds of all so-called "Western" knowledge was originally copied from China - including things like "James Watt's" steam engine which was invented in China 600 years before Watt ever thought of it.

China has put men into space, built and orbited its own functioning space station, is launching its own GPS satellite system, has built a submersible that can descend 7,000 meters under the sea, as well as supersonic missile technology, and leading the world in DNA synthsising and human genome mapping.

All of that was developed domestically, and much more. In the future, it might be better to keep your foolish opinions to yourself and not slander China with your bigotry.

China may be doing much of its own engineering, but is not doing those engineers any favors by having a few high profile technology espionage scandals over the last 10 years. Evidence in some cases even seems to point back to the China government as the instigator. I am not saying no one else does this, but perception is everything. Little has been done to facilitate trust.

Transparency is considered irrelevant if the issue is related to national security. If you chief says that this is an order, dont argue. On this basis, no further explanation will be given on "national security". This broad if not empty term will spread like virus. It may have no relation to protectionism as suspected.